SOUTHWEST WHEY v. NUTRITION 101

The opinion of the court was delivered by: Richard Mills, U.S. District Judge.

OPINION

A postscript to the "Whey Saga."

The Motion for Remittitur is denied.

BACKGROUND

On March 8, 2001, a jury entered a verdict finding both Defendant
Nutrition 101 and Plaintiff Southwest Whey liable. The jury awarded
Plaintiff, inter alia, a punitive damages award of $300,000. Defendant
asserts that because its net worth is $217,628.30, a punitive damages
award of $300,000 is excessive as a matter of Illinois law.

ANALYSIS

A punitive damages award will not be overturned as being excessive
unless it is "monstrously excessive, born of passion and prejudice, or
not rationally connected to the evidence." American Nat. Bank & Trust
Co. of Chicago v. Regional Transp. Authority, 125 F.3d 420, 437 (7th
Cir. 1997). "In reviewing an award of punitive damages, the role of the
district court is to determine whether the jury's verdict is within the
confines set by state law, and to determine, by reference to federal
standards developed under Rule 59, whether a new trial or remittitur
should be ordered." Browning-Ferris Indus. of Vermont, Inc. v. Kelco
Disposal, Inc., 492 U.S. 257, 279 (1989).

Illinois views punitive damages as a punishment. Kochan v.
Owens-Corning Fiberglass Corp., 242 Ill. App.3d 781, 797, 610 N.E.2d 683,
734 (1993). "The nature of punitive damages in Illinois is clearly
singular — it is punishment for the defendant." Hazelwood v.
Illinois Central Gulf R.R., 114 Ill. App.3d 703, 712, 450 N.E.2d 1199,
1207 (4th Dist. 1983). "That punishment is designed in turn to promote
three purposes: (1) to act as retribution against the defendant; (2) to
deter the defendant from committing similar wrongs in the future; and (3)
to deter others from similar conduct." Hazelwood, 114 Ill. App.3d at
712, 450 N.E.2d at 1207. Important considerations in reviewing a punitive
damages award include "the nature and enormity of the wrong, the
financial status of the defendant, and the potential liability of the
defendant." Deal v. Byford, 127 Ill.2d 192, 204, 537 N.E.2d 267, 272
(1989). Those considerations are not exhaustive. The underlying purpose
of such an award must be furthered. Deal, 127 Ill.2d at 204, 537 N.E.2d
at 272. Because the assessment of damages is primarily an issue of fact
for the jurors who apply their combined wisdom and experience, deference
must be given to the careful deliberative process of the jury. See Barry
v. Owens-Corning Fiberglass Corp., 282 Ill. App.3d 199, 207, 668 N.E.2d 8,
14 (1st Dist. 1996).

Here, Plaintiff and Defendant entered into a joint venture in which
Plaintiff would procure w hey from dairies and Defendant would market
whey to hog farmers in the region east of the Mississippi River. The
jury indicated on the verdict form that they found Defendant's
president, Peter Ross, breached his fiduciary duty to the joint venture
when he ceased his marketing efforts by the summer of 1992. Evidence was
presented to the jury that once Peter Ross learned about the whey business
from Plaintiff's president, Jack Muse, he turned his back on the joint
venture and acted in a way that benefitted only himself. The Court sees
nothing improper about the jury's punitive damages award in light of this
evidence.

II. Financial Status of Defendant

Defendant's motion focuses on the second prong of the punitive damages
award analysis: the financial status of defendant. Defendant's sole
argument is that the punitive damages award exceeds its net worth;
therefore, the award is excessive and must be reduced. Its motion is
rife with cases where courts have ordered remittiturs based on a
defendant's net worth.

In its response, Plaintiff argues Defendant's net worth was not
$217,628.30 as Defendant alleged, but that it was actually closer to $1
million and therefore, a punitive damages award of $300,000 was not
excessive but well within the appropriate range. Plaintiff arrives at
the $1 million figure by subtracting $431,886.81 (total liabilities) from
$1,407,321.30 (total assets without depreciation).*fn1 Plaintiff also
argues that goodwill ...

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